Embodiments disclosed herein relate to payment systems. In particular, some embodiments relate to methods, apparatus, systems, means and computer program products for interconnecting “closed loop” payment systems with “open loop” payment systems.
Payment card systems are in widespread use. A prominent payment card system is operated by the assignee hereof, MasterCard International Incorporated, and by its member financial institutions. The MasterCard payment card system and similar systems are sometimes referred to as “open loop” systems because transfers via the system may occur between two financial institutions (serving respective customers) that do not have a contractual relationship with each other but rather are members of the system. Thus transactions may travel within the system from an account at one FI (financial institution) via the system to an account at another FI, and not directly from one institution to the other. Accordingly a transaction between two end users does not require both users to be customers of the same payment service provider, and the system is “open” to any customer of any FI that is a member of the system.
A typical purchase transaction in an open loop payment system will now be described. To initiate the transaction, a customer visits a retail store operated by a merchant, selects goods that he/she wishes to purchase, carries the goods to the merchant's point of sale terminal, and presents his/her payment card to the point of sale terminal. The point of sale terminal reads the customer's payment card account number from the payment card, and then sends an authorization request to an acquirer financial institution (FI) with which the merchant has a relationship. The authorization request includes the payment card account number and the amount of the transaction, among other information. The authorization request is routed via the payment card system (which may be, for example, the well-known Banknet system operated by the assignee hereof) from the acquirer FI to the issuer FI that issued the customer's payment card.
Assuming that all is in order, the issuer FI transmits a favorable authorization response to the merchant's point of sale terminal through the payment card system and via the acquirer FI. The transaction at the point of sale terminal is then completed and the customer leaves the store with the goods. A subsequent clearing transaction initiated by the merchant results in a transfer of the transaction amount from the customer's payment card account to an account that belongs to the merchant and that is maintained at the acquirer FI. The customer's payment card account may be, for example, either a debit card account or a credit card account. In the former case, the clearing transaction results in the funds being debited directly from the account. In the latter case, the clearing transaction results in a charge being posted against the account, and the charge subsequently appears on the customer's monthly credit card statement.
The foregoing description of the typical transaction may be considered to be somewhat simplified in some respects. For example, a so-called merchant processing system (not shown) may be interposed between the POS terminal and the acquirer FI. As is familiar to those who are skilled in the art, a merchant processing system may be operated by or on behalf of the merchant to form part of the communications path between the acquirer FI and a considerable number of POS terminals operated by the merchant. It is also often the case that a third party transaction processing service may operate to handle payment card transactions on behalf of the acquirer and on behalf of a large number of other like financial institutions.
While so-called open loop payment systems are a prevailing mode of handling transactions in the United States and other highly developed countries, “closed loop” systems may also play a role in those countries, and are often quite important in less developed countries. In a closed loop system, all customers in the system have accounts with a single payment services provider (which may be a bank) or with a small number of cooperating payment services providers. In these systems, purchase or payment transactions involve direct transfers between customers' accounts that are issued by the payment services provider. Heretofore, payment systems have not supported transfers from a closed loop system account to an open loop system account. As a result, the usefulness of closed loop systems has been somewhat limited.